For City Publications franchises in Indiana, what is the impact of Indiana Code 23-2-2.7-1(7) on the termination of a franchise?

According to City Publications' 2025 Franchise Disclosure Document, Indiana Code 23-2-2.7-1(7) affects franchise terminations in Indiana. Specifically, this statute makes it unlawful for City Publications to unilaterally terminate a franchise agreement unless two conditions are met: first, there must be a material violation of the Franchise Agreement by the franchisee; and second, the termination must not be carried out in bad faith by City Publications. This provision is designed to protect franchisees from arbitrary or unfair terminations.

For a prospective City Publications franchisee in Indiana, this means that the franchise agreement cannot be terminated by City Publications without a legitimate and significant reason. A "material violation" generally refers to a serious breach of the agreement's terms, such as failure to meet sales quotas, non-payment of royalties, or violation of brand standards. Furthermore, the "good faith" requirement means that City Publications must act honestly and fairly in its dealings with the franchisee, and cannot use termination as a means of exploiting the franchisee or avoiding its own obligations.

This protection aligns with franchise laws in many states that aim to balance the power dynamic between franchisors and franchisees. It is important for prospective franchisees to understand what constitutes a "material violation" under the City Publications franchise agreement and to ensure they conduct their business in a manner that complies with the agreement's terms. Additionally, franchisees should document all interactions with City Publications to protect themselves from any potential claims of bad faith termination. Consulting with an attorney experienced in franchise law is advisable to fully understand these rights and obligations under Indiana law and the franchise agreement.